2013 APR n AM 9:50

CITY OF OAKLAND

FROM:

T O : D E A N N A J. S A N T A N A
CITY A D M I N I S T R A T O R
S U B J E C T : Quarterly Report on Foreclosure Issues

City Administrator
Approval

\/9/i,
W k

AGENDA REPORT

DATE:

Fred Blackwell
Assistant City Administrator
March 29, 2013

Date

A
N ^

COUNCIL DISTRICT: City-wide

RECOMMENDATION
Staff recommends that the Committee accepts this quarterly informational report;
Quarterly Tracking Report on Housing Foreclosure and Outcome Data
from Related City Programs.

BACKGROUND
This report responds to the standing request of the Community and Economic Development
Committee for a quarterly report tracking housing foreclosure data and outcomes from City of
Oakland programs designed to help address problems caused by foreclosures.

ANALYSIS
I.

RESIDENTIAL FORECLOSURE D A T A & TRENDS

National information on foreclosure issues shows the following trends in many urban
communities:
1. Significant decrease in foreclosure activities.'
2. Increase in short sales.^
3. Increase in investors purchasing foreclosed properties.^
' RealtyTrac, U.S. Foreclosure Starts Fall to Six-Year Low in January, 2/14/13. www.reallvtrac.com.
^ New York Times, Despite Aid, Borrowers Still Face Foreclosure, 2/21/13.
^ SF Chronicle, Foreclosures Drop in Bay Area, California, 1/23/13. When Investors Buy Up The Neighborhood:
Preventing Investor OwnershipfromCausing Neighborhood Decline. Policy Link, April 2010.
Item:
CED Committee
April 23,2013

Deanna J. Santana, City Administrator

Subject: Quarterly Report on Foreclosure Issues
Date: March 29, 2013

Page 2

The following provides a snapshot of national and state outcomes from the National Mortgage
Settlement Agreement negotiated with five (5) major banks: Ally, Bank of America, Citibank,
JP Morgan Chase, and Wells Fargo. As highlighted in recent media articles, there is significant
concern that the banks are fulfilling Settlement Agreement (SA) obligations through short sales
rather than loan modification and other homeownership preservation strategies.'' Nationally,
short sales constitute 44% while homeownership support^ only constitutes 22% of the SA
implementation. In California, short sales have constituted 52% and homeownership support
24% of the SA.
National, Program Status as of Dec.31, 2012
Citibank

Chase

Wells

Total

$21IM
34%

Bank of
America
$4.002B
15%

$974M
35%

$2.3758
30%

$2.0568
49%

$9.6188
22%

$94 M
15%
168
27%

$9.818B
37%
$11.8468
44%

$1.3848
50%
$426M
15%

$7M
.09%
$5.2608
67%

$290M
7%
$1.8058
43%

$11.5938
26%
$19.5058
44%

Other

153
24%

$1.181B
4%

$7M
.25%

$224M
3%

$65M
1.9%

$1.628M
4%

TOTAL
COMPLETED

$626M

$26.8473

$2.7918

$7.8668

$4.2168

$42.3468

Citibank

Chase

Wells

Total

$264M
33%

$1,018
32%

$827M
42%

$3,988
24%

Type of Consumer
Relief
Homeownership
Support (Loan
mods., principal
reduction, interest
rate relieO
Second Lien
Modifications
Short Sales

Ally Bank

California, Program Status as of December 31, 2012^

Type of
Consumer Relief
Homeownership
Support (Loan
mods., principal
reduction,

Ally Bank
$51M
71%

Bank of
America
$1.8268
17%

SF Chronicle, 5 Big Banks Mortgage Relief Progress, 11/19/12. LA Times, Most Aid From Mortgage Settlement
in State Going to Short Sales, 11/19/12.
^ Since it is unclear if modification of second liens, without first lien modification, results in homeownership
preservation, it is listed separately rather than included as part of the Homeownership Support category. There may
be instances when modification of second liens would be sufficient for homeownership preservation.
* At least $25 billion was anticipated in homeowner relief funds. '
' The California Attorney General negotiated a separate side agreement that provided an additional $18 billion for
California.

Item:
CED Committee
April 23,2013

Deanna J. Santana, City Administrator

Subject: Quarterly Report on Foreclosure Issues
Date: March 29, 2013

Page 3

Type of
Consumer Relief
interest rate
relieO
Second Lien
Modification

Ally Bank

Bank of
America

Citibank

Chase

Wells

Total

$20M
29%

$3.4288
32%

$366M
45%

$4M
.1%

$138M
7%

$3.9568
23%

Short Sales

$5.4778
51%
$58M
.54%
$10.7898

$179M
22%
$1,5M
.2%
$809M

$2.1528
67%
$I7M
1%
$3.1928

$985M
50%
$22M
1%
$1.9728

$8.7938
52%
$111M
1%
$16.85B

Other
TOTAL
COMPLETED

$71M

Oakland data follows these national trends.

A. Decreasing Numbers of Oakland Foreclosure Activities
The rate of foreclosure activities has significantly decreased in Oakland. However, there are still
significant numbers of Oakland residents in or at risk for foreclosure. In addition, Corelogic data
shows that there are about 20,000 underwater borrowers in Oakland. Staff is working on
accessing data on how many of these households are delinquent.

Notice of Default: decreased 64.1% since the prior year.

o However, there are over 1,000 Oakland households with a current NOD.^
o In the past quarter, 197 new NODs were filed.

Sale to Third Parties Via Trustee Sales: decreased 33% since the prior year."'
o However, there were 1,722 scheduled trustee sales in the months of December,
January and,February,
o There were 423 NOD properties sold to third parties through trustee sales in 2012.

Back to Bank, REO: decreased 71.11% since the prior year.

o However, there are 815 current REO properties in Oakland.''
o The City's registry shows that about 42% of the REO properties are vacant; 31%
are tenant occupied; and 27% are occupied by the prior owner.

^ ForeclosureRadar http://www.foreclosureradar.com/califomia/alameda-county/oakland-foreclosures.
^ ForeclosureRadar shows that there are 1,179 properties with a NOD. Id. The City's registry has 1,072 NODs
registered, but this figure is an undercount as lenders have not registered 100% of their properties.
'' Id^ The City's registry has 436 REOs registered, but this figure is an undercount as lenders have not registered
100% of their properties.

Item:
CED Committee
April 23,2013

Deanna J. Santana, City Administrator

Subject: Quarterly Report on Foreclosure Issues
Date: March 29, 2013

Page 4

More information, including foreclosure activities by specific major lenders is available at

Attachment A.
B. Increasing Short Sale*^ Activities in Oakland
The rate of short sales in Oakland has significantly increased with a 35%) increase from 2011 to
2012.
- Year,;;
. '-.'KlsMSf'SHort.iSaiesTotaH
2011
598
2012
804
% increase from 2011 to 2012
35%

For many homeowners, short sales may be the best available option. However, recent reports
have indicated instances when some homeowners feel compelled into short sales without the
opportunity to explore other options.'^ For example, a recent statewide survey conducted by the
California Reinvestment Coalition of 84 housing counseling or legal service agencies, including
about 8 providers for Oakland, found that over 30% of survey respondents believed that there has
been pressure on homeowners to do short sales, at least "sometimes."^''
C. Investor Purchase of Foreclosed Properties
Recent research shows that from 2007 to 2011, investors purchased 65 to 88% of Oakland's
residential, 1-4 unit, foreclosed properties. About 93% of these properties are in Oakland's lowto-moderate income neighborhoods, ^QQ Attachment B.
In a recent Urban Strategies Council report'^ and at Council meetings, Oakland residents have
complained about their inability to purchase these properties by being out-bid by investors. In
addition, there exists potential impact to the Oakland housing market when investors dispose of
their properties in Oakland after their investment holding period, anticipated to be in five (5) to
seven (7) years.

12

Short sales are when a property is sold and the lender agrees to accept less money than is actually owed. In a
short sale, the homeowner does not receive any proceeds from the sale.
Oakland Reveals the Impact of Homeowners Steered into Short Sales, ACCE Home Defenders League and East
Bay Move On, March 8, 2013, Race-Talk Blog by the Kirwan Institute for the Study of Race and Ethnicity, Ohio
State University.
Chasm Between Words and Deeds IX: Bank Violations Hurt Hardest Hit Communities. California Reinvestment
Coalition, April 2013.
Who Owns Your Neighborhood? The Role of Investors in Post-Foreclosure Oakland. Urban Sfrategies Council,
June 2012.

Item:
CED Committee
April 23, 2013

Deanna J. Santana, City Administrator

Subject: Quarterly Report on Foreclosure Issues
Date: March 29, 2013

II.

Page 5

FORECLOSURE PREVENTION & MITIGATION P R O G R A M STATUS

On October 16, 2012, Council approved funds for new and expanded activities to prevent and
mitigate foreclosures, including the following:

Direct outreach to homeowners with a NOD and tenants living in NOD properties.
Hotline services for tenants and homeowners in distress to connect to appropriate
services.
Housing counseling and legal services.
City escalation team to work with Bank escalation teams.
ROOT loan fund program to preserve homeownership for qualified distressed families.
Reporting of violations of National Mortgage Settlement Agreement or the new State
Homeowner Bill of Rights Act to the State Monitor or Attorney General's office.

Several of these programs required a start-up period before providing direct services. The
outreach workers began their door to door outreach services in mid-January. CHDC's housing
coimseling services in Oakland began in March.
Status

Oakland
Households
Reached or
Served
Outcomes

Outreach
(Allen
Temple,
OCCUR,
Family
Bridges,
MLK FC,
CJJC)
774
attempts
158
successful
contacts
23
homeowners
contacted
services
22 tenants
contacted
services

Homeowner
Hotline
(HERA)

Housing
Counseling
(CHDC
since March
& Unity
Council)

Homeowner
Legal
Services
(HERA)

Tenant
Hotline
(CJJC)

Tenant
Counseling
(CJJC)

Tenant Legal
Services
(Centro Legal
& EBCLC)
;

17

Total: 23

76

22

19

Total: 51

17
homeowners
served by
direct
services
(HERA or
CHDC)

10 CHDC
13 Unity
Council
CHDC
3 referred to
ROOT
4 in process
for loan
mod

41 EBCLC
10 Centro
45 brief
service
1 loan mod
19 in process
for loan mod
11 referred to
ROOT or
CHDC
counseling

2 legal
services
referral
13 Case
Managem
ent
6 Brief
Counselin
S

3 stopped
eviction or
lock-out ,
2 Legal
services
2 Cash for
keys
I stopped
Illegal Rent
Increase
5 Repairs
Addressed
6 Brief
Counseling

EBCLC:
30 brief
service
7 stopped
evictions
I won
habhability
2 cash for
keys
Centro:
4 nego
settlement
2 rent in
rescinded
4 brief service

Item:
CED Committee
April 23,2013

Deanna J. Santana, City Administrator

Subject: Quarterly Report on Foreclosure Issues
Date: March 29, 2013

Page 6

The ROOT Loan Fund Program

The ROOT program, administered by Community Housing Development Corporation, an
affordable housing nonprofit agency, preserves homeownership for qualified homeowners by
purchasing their properties at current market value and reselling them back to the homeowner.
Wells Fargo and Chase Banks have agreed to participate in the program. Bank of America is
evaluating their participation. The City is in communication with Fannie Mae and Freddie Mac
and requesting that the Federal Housing Finance Agency (FHFA), which serves as the regulator
and conservator for Fannie Mae and Freddie Mac, consider participation in the program. While
FHFA has prohibhed the use of principal reduction nationally, h recently agreed to engage in
principal reductions in California through the Keep Your Home California program and funds.
There are 12 Oakland households who have passed the preliminary review for the ROOT
program'^ and property valuation and other needs are being assessed for negotiation with
participating lenders. In addition, there are 4 Oakland households who have expressed interest in
the ROOT program but need to go through a loan modification process first, which CHDC is
conducting for them. 10 Oakland households are working on submitting their applications for
the ROOT program and 3 households were reviewed and deemed ineligible, i.e. the property was
not their primary residence. Outreach will also be conducted to Oakland homeowners with
NODs and loans from participating lenders.
Jobs for Oakland Residents
In addition to staff currently employed with the funded organizations, the outreach organizations
employed 8 employees to conduct street outreach on a part-time basis, all of whom are Oakland
residents.
Provision of Technical Assistance for Other Communities
There has been interest from other communities regarding the City's foreclosure prevention and
mitigation plan and staff has provided information and/or assistance to the following
communities: San Jose, Seattle, and Prince George's County. Mayor Quan also conducted a
presentation at a recent US Conference of Mayors meeting regarding the City's programs.
III.

FORECLOSED PROPERTIES P R O G R A M STATUS

The following is a quarterly and year-to-date summary of performance outcomes from the City's
Foreclosed and Defaulted Properties Registration, Inspection, and Maintenance Programs.
Specific information, including performance by major lenders is provided m Attachment A.
Preliminary criteria include participating lender, denial of loan modification, hardship, sufficient income, and NSP
target areas.

Item:
CED Committee
April 23, 2013

Deanna J. Santana, City Administrator

Subject: Quarterly Report on Foreclosure Issues
Date: March 29, 2013

Page 7

Time Period
1/1/13-3/31/13

Registrations
570

Inspections
126

FY to date

1,511

641

Charges Collected
$561,688 total
$193,688 reg fees
$368,000 penalties
$822,056 total
$393,056 reg fees
$429,000 penalties

Proactive inspections of 641 foreclosed and defaulted properties have found 41 instances of
blight, mostly minor, 93% of which were timely abated.
However, there are 3 current cases that came in through complaints that involve problem
occupants in foreclosed properties. Unless the occupants are engaging in criminal activities or
nuisance activities that arise to a certain threshold, the City, through OPD or the City Attorney's
office, is unable to directly intervene with the occupants. The City's recourse is to escalate
communications with the bank property owner and to use blight penalties, if there's the presence
of blight, as leverage to compel expedited bank action. Staff has been working with the City
Attorney's office to develop new tools to more effectively address these challenging situations.
Use of Liens on Properties Owned by Non-Major Lenders
There has been an increase in the sale of foreclosed properties. In order to protect the City's
financial interests on properties owned by non-major lenders, staff has begun issuing liens for
outstanding penalties. Non-major lenders own about 11% of the Oakland foreclosed properties
inventory. Liens are not generally issued on properties owned by major lenders^^ as the City has
assurance, including from past practice, that outstanding payments will be paid, even after the
properties are transferred.
Provision of Technical Assistance to Other Communities
There has been interest from other communities regarding the City's foreclosed and defaulted
properties program and staff has provided information and/or assistance to the following
jurisdictions: Los Angeles, Richmond, and San Diego. Information about the City's program
was also included in Mayor Quan's recent presentation to the US Conference of Mayors.
IV.

STATUS OF INVESTOR O W N E D FORECLOSED AND D E F A U L T E D PROPERTIES P R O G R A M

On November, 2013, the Council passed an ordinance requiring the registration, inspection, and
maintenance of foreclosed or defaulted properties purchased by investors. Staff has been
working on the development of the program, including a new online registration system and a
17

Bank of America, Chase, Fannie M^e, Freddie Mac, US Bank, and Wells Fargo.

Item:
CED Committee
April 23,2013

Deanna J. Santana, City Administrator

Subject: Quarterly Report on Foreclosure Issues
Date: March 29, 2013

Page 8

new database system to identify targeted properties for enforcement. It is anticipated that the
online registration program will be available in July. Staff will be providing outreach to the real
estate community to notify them of the new requirements. In addition, individual notices will be
issued on specific properties that are subject to the new requirements with the provision of time
to register.
V.

D E V E L O P M E N T OF PROACTIVE P R O G R A M S AND P O L I C Y RECOMMENDATIONS

As discussed in prior CED Committee meetings and requested by Committee members, staff has
been conducting due diligence to develop new strategies to accomplish the following goals:
1. Preserve homeownership for qualified residents.
2. Provide meaningful access to foreclosed properties for owner-occupant purchasers.
3. Support the disposition of foreclosed properties into affordable and quality rental housing.
Expanding First Look Programs& Assistance from National Experts
Research was conducted into best practice strategies in other cities, such as St. Paul Minnesota.
Staff also consulted with national and local experts, including Wells Fargo and Chase Banks'
Community Development programs. National Community Stabilization Trust, Enterprise
Community Partners, LISC, Alameda County Public Health Department, Urban Strategies
Council, ACCE, EBHO, CHDC, Harvard Law School's Technical Assistance Project, Self-Help,
Habitat for Humanity, and others. A proposal was developed that built upon best practice
strategies and existing systems for the disposition of foreclosed properties.
Preliminary communications occurred with the Oakland Realtors Association and its leadership
will be consulted in program development and operations. Staff will also consult with the Jobs
and Housing Coalition and other real estate development interests.
The administration convened a recent meeting with senior officials who oversee the disposition
of REO properties for the top six (6) lenders in Oakland'^ to discuss the below proposal:
1. Create a pipeline for all REO properties to go through existing First Look
programs, especially operated by the National Community Stabilization Trust (NCST)'^
for purchase by:

Bank of America, Chase, Fannie Mae, Freddie Mac, US Bank, and Wells Fargo.
The National Community Stabilization Trust, is a national nonprofit agency with support from HUD, set up to
assist communities to weather the foreclosure crisis. The Trust operates a First Look program where participating
lenders provide a pre-market opportunity for nonprofit and some for-profit agencies approved by the Trust to
purchase foreclosed properties. Some lenders, such as Fannie Mae, operate their own First Look program and
include owner-occupant purchasers.

Item:
CED Committee
April 23, 2013

Deanna J. Santana, City Administrator

Subject: Quarterly Report on Foreclosure Issues
Date: March 29, 2013

Page 9

a. Nonprofits and for profits with socially responsible outcome commitments as

vetted by a City of Oakland RFQ, to be developed in collaboration with the
National Community Stabilization Trust and major lenders.
b. Owner-occupant purchasers with down-payment assistance or through housing
counseling programs.
Major lenders have expressed openness to and interest in supporting the development of
this program. Staff is working with the NCST, collaborative partners and major lenders
to develop a new First Look program for Oakland REO properties.
2. For homeowners denied a loan modification, provide information to the City for a
Second Look opportunity for Bank Escalation or City sponsored programs.
The response from major lenders has been that they cannot share confidential information
and provide a list of homeowners denied loan modifications to the City or nonprofit
agency. However, if the City approaches them with specific cases, they will connect us
with their Escalation offices.
3. Short Sale purchases to City vetted nonprofits or for-profits with socially
responsible outcomes:
a. Resale to existing homeowners, in some agreed upon time period, as
homeownership preservation for qualified homeowners through the ROOT
program.
b. Sale to new owner-occupant purchasers.
c. Sale to nonprofits or for-profits, approved by the City's RFQ, who are engaging
in resale to owner-occupant purchasers or providing quality and affordable rental
housing.
As short sales are initially real estate transactions involving the homeowner, realtors, and
a new buyer, the City will need to work with Oakland homeowners and the realtor
community in identifying homeowners who are interested in engaging in a short sale that
results in either homeownership preservation or resale to a new owner occupant. The
lenders would then need to approve the short sale.
4. Provide City or acceptable nonprofit agency with access to 60 day delinquent borrower
information for City-sponsored outreach and housing counseling services.
The response from major lenders has been that they are unable to share this confidential
and proprietary information with the City.
Given the rising numbers of short sales and reports that home preservation options may not be
fully considered, the Administration is concerned that Oakland homeowners in distress may not
Item:
CED Committee
April 23,2013

Deanna J. Santana, City Administrator

Subject: Quarterly Report on Foreclosure Issues
Date: March 29, 2013

Page 10

be fiiUy informed about their rights or have access to supportive housing counseling services.
Staff has identified a database system that will provide the City with information on delinquent
borrowers, Experian, and will be using this data to expand the City's outreach efforts to
delinquent borrowers who may not have yet been issued a NOD. An additional $10,000 will be
added to the City's existing contract with HERA to support a public awareness campaign and
connect interested delinquent homeowners with City sponsored housing counseling and legal
services.
Development of Policy Recommendations for Council Consideration
There may be policy recommendations for Council action to support the alternative disposition
goals of home preservation, new homeownership opportunities, and quality and affordable rental
housing. Staff will be convening meetings with different stakeholder groups to develop any
policy recommendations for Committee consideration, including the following: ACCE,
Alameda County Public Health Department, CJJC, East Bay Rental Housing Association, Jobs
and Housing Coalition, OCO, Oakland Realtors Association, Urban Strategies Council, and
others.
For questions regarding this report, please contact Margaretta Lin, Departments of Housing and
Community Development and Planning and Building, at 510-238-6314.
Respectfully submitted.

Fred Blackwell
Assistant City Administrator
Reviewed by:
Michele Byrd
Director of Housing and Community Development
Rachel Flynn
Director of Planning and Building Department
Ray Derania

Attachment A: Foreclosure Data

& Properties Status
Attachment B: Map of InvestorOwned Foreclosed Properties

Building Services Division

Prepared by;
Margaretta Lin
Strategic Initiatives Manager
Departments of Housing and Community Development
and Planning and Building

Item:
CED Committee
April 23,2013

Attachment A: Foreclosure Data and Programs

Vr^'^-iiiiiiliRegistra'tibhs'^iy,!

igjSi^Foreclosure Events ,
Recorded NOD/REO Filings
Time

Bank
Period
l/l/13rT3/31/13;i'i'

Trustee

NOD

Notice of Default

REO

Sale

Total

Owner

Tenant

NOD

Occupied

Occupied

Vacant

12

67

45

14

Chase
Fannie

Freddie

US Bank

197

Total

11

Tenant

REO

Occupied

Occupied

26

97

20

112

Chase

118

52

353

10

Fannie

US Bank

""^.;o '
49

;^

41

142

.;;o

: ! ' ' : '..'1

558

17

55

31

217

56

67

60

15

5
;i
40

' i ''S'iir/
8

27
A

1
. 801

'IS

12
2

25

52

1
"^f-:

1
irni-n. ^ifOKL

-. . v.

^ .

106

MrcHw'ii^-lO

^:;;:;;;.k:';::;;..:i^o

60

95

126

0
53 / ' : . 27
191

83

"... . '-.-^-i^
7
v/4

'; !;)\~.,
36

18

15

189

28

76

85

I- ;v-.38

.. "^"10

.8

.'!^.;20

13

'16

,4

21

37

; ^ 65

... 13

22

- v ; 3 0i

436

109

139

188

% :25
3

42

. 25

; " ^^1^6

- :.^^^8A .'':0

45 . ,

Penalties

,. '

s.r/-;^v^2
11

Violations

'

1075

#Inspected

r-.

' ': '-;<>f:: 3

10
75

296

Vacant

Abatement
Timely
Abatement

-::r'';-;:

s-;-^v,5;;^io

r ;'^1l38 :0'";'\l ':v/7 ^:^^^

;39

30
255 ' ':'::J\"85 . :: ' : ' '37 ^!:'-474
36
15
6
3
Lil: 445
:.::n56 ^:/'i,;;;-2io
1096

288

:.'">
' >
77

i;",; ..I;:N:67

I;ili^b'"^i;?!i6

Ifii^iiili^^i45 ^5'/ i(?ri2

BofA

F-Y:to Diate: :

Total

;;i^^5i

fSitf^ii'li'62

Others

Others

Owner

:-.vS:i:^12

19

y5f!^;-;":MlO

Ocwen

Wells
Ocwen

Total

^^;^^:.:;3

Wells

Freddie

Inspection

''^'

I'v"
17

BofA

J; Property Conditions;
Foreclosed / REO

1 ..

641

41

4
3

'T-

.7

12

. '12

4
1

~ '1

496

- '72

"

38

ATTACHMENT B

111

ii
Key Facts
II foreclosed properties in O a k l a n d between 2 0 0 7
ber 2011 were purchased by investor-speculators.
9 3 % of all investor-speculator acquisitions are in O a k l a n d ' s
flatland neighborhoods.

Investor A c q u i r e d P r o p e r t y ( 2 0 0 7 through O c t 201 1)

I City Council District

0 0.25 0.5
I Miles ijiij'
^1 ^I ^ I^ ^I ^I^ ^I ^I ^ I^ I

O n l y 10 out of the 30 most active investors are based in O a k l a n d .

ji^alysis by U r b o n S t r a t e g i e s C o u n c i l .